GAO starts TARP audit touting “TARP’s positive record to date”

By Cody Willard

Long-time readers of this blog and viewers of Happy Hour know that I used to tell anybody and everybody that the Wall Street TARP bailouts are great for people who supposedly risked their own money owning banks stocks or lending banks money. I’ve constantly warned that the premise of taxing Main Street and my father, a small town veterinarian with a growing practice for thirty-five years, to bail out Wall Street was somehow going to be good for Main Street and for my father.

You know a lot of people thought I was crazy and most every Wall Streeter that would come on our show would tell us that “clearly the shareholders of these banks have been hurt plenty too”. To be sure, I’m utterly disappointed in myself that I didn’t recognize that it’d take some time for the market and these same people on our show to appreciate just how much help these bank shareholders really have been given in the last year — and continue to be given with TARP, TALF, PPIP, and 0% Fed funds rates and all the other wealth that’s being redistributed to Wall Street.

When people would ask me about buying C below a dollar or BofA below $5, I’d tell them that since these firms were insolvent without government welfare to prop up their shareholders and keep the lights on, buying these stocks was simply a gamble on the government would tax main street long enough and large enough to get them through to the other side. Well, as Milton Friedman once said and as I should have listened to — “Nothing is so permanent as a temporary government program”.

At any rate, I keep calling this strange new non-Constitutional economy and political system created by the Republican/Democrat Regime in power over the course of my lifetime “bizzaro world” because I can’t understand how we can say that redistributing wealth from Main Street to Wall would be good for Main Street. I can’t understand how the Republicans and Democrats in power told us that if we didn’t send a check to Bear Stearns’ shareholders for $10 for each share of BSC stock they owned that our checking accounts would stop working. Yeah, that was before TARP and that was done under an Administration from the party that pretends they favor free markets and personal accountability.

I also don’t understand how the GAO on page 17 of their new “audit” of TARP can claim that “Despite TARP’s positive record to date, and the improving financial and economic outlook…”

Sure, it’s possible that the “getting less worse” economy of the last few months of 2009 might actually “improve”, but when you look at unemployment jumping from below 5% to over 10% since we started taxing Main Street to bail out Wall Street and when you look at bank lending dropping 40% since we started directly taxing Main Street to bail out Wall Street via TARP…

Well, you tell me. Watch this graphic of country unemployment spike around the country since TARP was enacted and tell me if we can trust the “audit” from a government agency that starts off their report by claiming the program they’re “auditing” has a “positive record to date”?

Story Conversation

About The Cody Word

Cody Willard writes the Revolution Investing investment newsletter for MarketWatch and posts the trades from his personal account at TradingWithCody.com He is the founder of WallStreetAll-Stars.com and the principal of CL Willard Capital. Cody serves as an adjunct professor at Seton Hall University and is on the University of New Mexico Alumni Board. He was an anchor on the Fox Business Network, where he was the co-host of the long-time #1-rated show on the network, Fox Business Happy Hour. Cody, a former hedge fund manager, and his stock picks and economic outlooks have been featured on NBC’s The Tonight Show with Jay Leno, ABC’s 20/20, CBS Evening News, CNBC’s SquawkBox, Jon Stewart’s The Daily Show, as well as in the Financial Times, Wall Street Journal, New York Times, and many other outlets.